A decade of neglect: Why Tasmania deserves a FTTP rollout

Malcolm Turnbull never specifically promised Tasmanians that the all-fibre NBN rollout in the state would be completed as originally planned. But if there is any one state in Australia that deserves to have a universal Fibre to the Premises National Broadband Network, it’s the Apple Isle, which has been a perpetual broadband backwater for the past decade and more.

If you live on mainland Australia, the ongoing controversy surrounding the Coalition’s plans for modifying the rollout of Labor’s flagship National Broadband Network in Tasmania may seem more than a little strange. After all, when in Opposition, Communications Minister Malcolm Turnbull never actually promised Tasmanians that a Coalition Government would complete a Fibre to the Premises-based (FTTP) rollout, as many in the state have claimed over the past few months.

The crux of the claim revolves around comments Turnbull made during the height of the election campaign in mid-August. At the time, a number of Tasmanian groups and the Australian Labor Party had called on the Coalition to clarify the extent to which Labor’s FTTP rollout would take place in the state, given that the Coalition’s ‘Economic Growth Plan for Tasmania’ policy document had appeared to muddy the Coalition’s commitments in the state.

Turnbull’s answer to this issue, if you examine it closely, and as he delivered it on several occasions, was very clear. It is encapsulated well in this brief statement made via the Member for Wentworth’s website on 16 August, in response to a somewhat sensationalist article published in the Launceston Examiner that day. Turnbull said:

“As stated to TasICT in May: ‘We intend to honour existing contracts – the alternative would be to breach them and that is a course we would not countenance’. This is not just a commitment to honour contracts where construction is under way – but all contracts which have been entered into. The statement in the ‘Economic Growth Plan for Tasmania’ that the NBN rollout will be completed by 2019 under the Coalition refers to the mainland rollout and is not specific to Tasmania.”

Reading between the lines, what Turnbull is saying here is two thing. Firstly, the then-Shadow Minister was committing himself only to honouring contracts which NBN Co had already signed with contractors in Tasmania such as Visionstream, which is largely deploying the NBN in the state. The reason for this caution should be apparent to anyone who’s observed several changes of Government in Australia. Opposition parties obviously need to ensure the stability of projects already undertaken under the previous administration, for public interest reasons as well as legal and financial reasons, to say nothing of the reputational damage that would ensue to all concerned from cancelling major deals wholesale.

However, Turnbull also re-committed a Coalition Government to its already stated policy aims, encapsulated in its April 2013 NBN policy document. In short, to deliver most Australians broadband speeds of 25Mbps by the end of 2016 — and most of those broadband speeds of 50Mbps by the end of 2019. This is what Turnbull was promising Tasmania — not a specific technology such as FTTP.

The way this has played out in practice, in Turnbull’s early instructions to NBN Co, has been very consistent with this statement.

Several weeks ago, Turnbull and Finance Minister Mathias Cormann ordered NBN Co (PDF) to continue deploying fibre where build instructions had already been issued to delivery partners, but to hold fire on new orders while NBN Co conducts a strategic review of its operations; a review which will more than likely recommend some watering down of Labor’s staunchly all-fibre vision. In addition, the two ministers reminded NBN Co of the Coalition’s 2016 policy commitments.

It may appears that this move could constitute a breach of NBN Co’s contracts with partners like Visionstream. But in practice, it’s very well expected that those contracts contain clauses for precisely this kind of situation. Australia’s construction giants are well aware of the vagaries of working with government, and will doubtless have insured themself well against precisely this kind of eventuality. After all, Visionstream only won its deal with NBN Co in March 2012; at the height of the then-Abbott Opposition’s popularity. It seems unlikely the contractor would not have planned for a change in Government a year and a half later; and it seems even less likely that NBN Co’s extremely large team of lawyers would have let the company get itself into a contractual mess it couldn’t extricate itself from.

Then, too, this is precisely what Labor predicted the Coalition would do in Government.

In August, then-Communications Minister Anthony Albanese went on a virtual rampage over Turnbull’s Tasmanian comments. In one particularly strongly worded statement published on 23 August, Albanese noted that the Hobart Mercury had reported that Turnbull had given an assurance that the Coalition intended to fully complete the fibre rollout in Tasmania.

“This is not what his policy states and is not the basis on which it has been costed,” said Albanese at the time. “The Coalition policy is very clear. There is no unqualified commitment to “honouring” contracts. It states: “the Coalition reserves the right to review and seek to vary any of those contracts in the light of the Coalition’s broadband policy.” In the background paper the Coalition policy states that they will vary contracts so that they are deliverable in ways that align with Coalition policy.”

And in an interview with the ABC’s Hobart-based radio host Leon Compton, Albanese made the likely situation even clearer. “The Coalition’s policy is very clear, that it will stop wherever contracts haven’t been issued.”

The truth is that Turnbull’s comments regarding the Coalition’s NBN plans for Tasmania have always been interpreted by pundits, lobbyists and even politicians as promising more than the Earl of Wentworth ever did.

TasICT chief executive Dean Winter misinterpreted Turnbull’s comments in August when he intimated Turnbull had confirmed that NBN Co had contracts to deploy FTTP across Tasmania, and so did Tasmanian Liberal Senator David Bushby, when he said that if the contracts were in place, then the FTTP NBN would be deployed across Tasmania. And, although we suspect lobby group Digital Tasmania is aware of the nuanced implications of what Turnbull specifically promised Tasmania (in short, nothing different than the rest of Australia), the group still continues to pressure the Coalition to stick to its word on the issue.

The nub of the matter, of course, is that despite what Turnbull actually said during the election campaign, Digital Tasmania and the others are right: Under no circumstances should NBN Co stop deploying FTTP broadband in the state. It should go the whole hog, and there are a number of reasons why.

Firstly, it should be obvious to anyone who has any history in Australia’s telecommunications industry that when it comes to broadband, Tasmania has had a shocker over the past decade.

One of the principle underlying factors which influences the price of retail broadband in Australia is the cost of data transit across national boundaries, which in Australia usually means getting data across the Pacific Ocean to the US or north to countries such as Singapore, both through undersea submarine cables. Over time, the growing number of undersea fibre links has cut that cost down, providing competition to Telstra’s previous monopoly in the area.

But in Tasmania, it wasn’t until July 2009 that the state was able to get a competitive cable across Bass Strait, piggybacking off the Basslink electricity cable. Ironically, Tasmania’s giant hydroelectric power generators were used as a subsidiary option to help power the mainland’s electricity grid, but it took a while before both sides could get organised for the mainland to help supply Tasmania’s telecommunications needs.

Until that cable was built, competitive telecommunications access in Tasmania really didn’t substantially exist, due to the unwillingness of companies like iiNet, TPG, Optus and others to deploy their own gear in the state and pay Telstra’s exorbitant costs to get Tasmanian’s data traffic back across Bass Strait. Melbourne ISP Netspace gave it a solid go — but didn’t ultimately change the game much.

What this meant for Tasmanians is that until late 2009, there wasn’t much telecommunications competition in the state at all; most people used Telstra for most things, and Telstra is not precisely known for upgrading its ADSL infrastructure in telephone exchanges until rivals do so; or cutting prices until it’s forced to.

The same goes for mobile broadband. It wasn’t until May 2011 that Australia’s supposedly number two telco Optus got serious about Tasmania. At the time, it had just 30 or so mobile base stations in the state; a number which it planned to triple. Forget Vodafone: The network rollout announced by Optus at the time saw over 45 towns get access to a mobile provider other than Telstra for the first time in their history.

“With this significant expansion, we will be the only mobile carrier capable of challenging the incumbent’s network reach in Tasmania,” said Optus Networks managing director Gunther Ottendorfer at the time. No kidding. And it took a long time for Tasmanians to get access to anything near the same level of competition as can readily be found on the mainland.

It was partially these market conditions which led then-Tasmanian Labor Premier David Bartlett to get highly engaged with the Labor Federal Government’s early attempts to build the NBN through a private/public sector partnership. Tasmania put in a bid for that process, and Bartlett made a persuasive argument to then-Communications Minister Stephen Conroy that no matter how the process came out, Tasmania should be first in line for better broadband. The initial, $4.7 billion NBN plan Labor took to the 2007 Federal Election failed; but it failed well for Tasmania, which received Conroy’s promise of early stage rollout priority for the much larger, $43 billion FTTP rollout which the Labor Senator and Prime Minister Kevin Rudd unveiled in April 2009.

Another factor is the state’s chaotic economy, which is largely based on tourism as well as exported products, but desperately needs propping up through the development of new sectors, such as the lucrative information technology field. Bartlett himself is a former IT consultant, and was well aware even back in 2008 that the deployment of better broadband in his state would very likely mean the rapid growth of its technology sector. Tasmania, after all, is a great source of cheap labor — all that was needed to capitalise on that would be better connectivity to the mainland.

As a side note, a fantastic example of that potential was illustrated in March this year, when mobile telco Vodafone revealed that it would double its call centre workforce in Tasmania to 1,500 and examine the case for bringing jobs back from overseas — all with a little government assistance. Today, if you call Vodafone’s customer support line, it’s more than likely that you’re actually speaking to someone in Tasmania.

At first the Tasmanian rollout went well, with a cluster of small towns — Smithton, Scottsdale and Midway Point — receiving fibre to their premises, in a rollout which was hailed as a milestone example for how the NBN deployment would go ahead in mainland Australia. And there is no doubt that the rollout in Tasmania is still progressing slowly, despite Turnbull’s claims to the contrary.

However, it’s also true that the troubles besetting NBN Co nationally — problems with asbestos, problems with contractors and even problems with its own maps — have also thrown the Tasmanian NBN rollout out of whack. There is an element of truth to Turnbull’s sensationalist claims this week — even if it hasn’t stopped completely, the Tasmanian NBN rollout has slowed down dramatically, and that’s not what residents of the state were promised. In badmouthing Visionstream’s performance in Tasmania, Turnbull may be both attempting to hold the contractor to account, while also scoring political points by pointing out the previous Labor administration’s failings.

The difficulty with the Tasmanian situation for a Liberal Communications Minister such as Turnbull is that the arguments which led Labor to put Tasmania first in terms of an NBN rollout still exist and are still incredibly strong. Although the State Government is considering a third fibre-optic submarine cable across Bass Strait, the state of broadband competition in the Apple Isle is still poor compared to the rest of Australia, due to the still powerful monoplistic presence of Telstra. Then too, Tasmania’s economy still need boosting, and the development of a strong IT sector is one of the most obvious ways to do that.

Turnbull must also consider the fact that Tasmania, fundamentally, is just not that large. In any of Australia’s main population centres — ranging from massive cities such as Sydney or Melbourne to smaller regions such as Newcastle or Wollongong, to name a few, the use of differentiated technologies to provide superfast broadband, as the Coalition’s NBN policy provides for, would not be as huge an issue as it will be in Tasmania.

In a state which only has a little over 500,000 residents in total, and where the state capital has just 216,000, it will be highly apparent which streets are the “haves” in terms of FTTP broadband, as Labor liked to put it during the election campaign, and which will be the “have nots” and receive inferior fibre to the node options. The situation will be even more exacerbated in the rest of Tasmania. In short, Tasmania’s not the sort of place where a Coalition Government can easily get away with a “compromise” NBN solution, as it will be able to in other major population centres, which already have better levels of broadband.

Then too, the Tasmanian population is already highly aware of broadband as an issue and has consistently raised its voice on the NBN topic as a unified group far louder than other states have.

After the 2010 Federal Election, former Howard-era Minister Peter Reith produced a report on the Coalition’s election loss. The majority of the report does not mention the NBN, but one section quotes extensively from a similar report produced last year by Sydney academic Julian Leeser into the Tasmanian leg of the election, which has been reported in brief.

“The failure to properly explain the Liberal Party’s broadband policy and the Labor Party’s effective scare campaign was a major cause of the party’s failure to win seats in Tasmania,” the report states. “This was the nearly universal review of people making submissions to the review and is borne out by research undertaken by the Liberal Party. In the view of many, the party’s policy amounted to a threat to come into people’s homes and rip the Internet out of the wall.”

The report added that the NBN policy had a particularly strong effect on Tasmania for a number of reasons. For starters, the fibre network was already being rolled out in some towns, and Tasmania is also often behind the mainland in receiving new technology — so the early stage NBN rollout was seen as a boost to the state, as well as having flow-on effects in terms of jobs, for example.

In comparison, the Liberals’ policy was not as clear-cut as Labor’s.

“One of the problems of the broadband policy was that nowhere in the policy document was there any carve-out for Tasmania or any explanation of what the Liberal Party would do with existing infrastructure,” wrote Leeser in the report. “Numerous senior Liberals in Tasmania had raised the issue of broadband in Tasmania with senior Federal Liberals in Canberra, but a carve-out for Tasmania was forgotten.”

“The broadband policy was written at the last minute without a set of Tasmanian eyes cast over it. The party needs to make a clear and unambiguous statement about its intentions on broadband infrastructure in Tasmania in the future.”

If you examine the past several months about how the Coalition’s NBN policy will be interpreted in Tasmania, it’s not hard to come to the conclusion that the Liberal and National Parties should have remembered that last paragraph in particular during their election campaign in the state. However, you could also argue that Turnbull significantly enhanced the Coalition’s standing in Tasmania in August, as he appeared to allow residents of the state to believe that a commitment to honouring NBN Co’s existing contracts entailed a full FTTP rollout in Tasmania — which it most certainly does not.

Taking all of this into consideration, it seems relatively clear that there would be significant benefits to Turnbull treating Tasmania differently than the rest of Australia when it comes to judging how the NBN should best be deployed in the state.

If you compare Tasmania to the rest of the country, after all, it is inherently different. It has fewer natural economic advantages, being neither a mining nor farming powerhouse, neither a financial center nor a major seat of government. Its telecommunications infrastructure has languished behind the rest of Australia for a decade now, as has its level of retail telecommunications competition; yet it desperately needs that infrastructure in order to stimulate its economy. And its population is highly aware of that fact and politically active regarding the NBN.

It’s for these reasons that politicians and the general public have always viewed Tasmania as being a special case for the NBN rollout. Tasmania was always slated to get the NBN first; it was always involved at a deeper level than other states in the project, and its politicians, on both sides of the fence, have always been more enthusiastic about the initiative than politicians on the mainland — even to the extent that some Coalition politicians in Tasmania have agitated for the NBN to be rolled out faster and more widely in the state, going against the dominant narrative of their national party colleagues.

They say in Government that ideally, every policy should have both a public interest aim as well as delivering a political bonus to the Minister of the day. That opportunity certainly exists here for the Coalition, which has sometimes struggled in Tasmania, but could do much to lock its future fortunes in with the state’s residents if it supported a decent NBN rollout.

For all these reasons, it would make sense for the Coalition Federal Government to continue putting Tasmania first when it comes to the NBN; and in many ways, that means guaranteeing a mostly FTTP-based NBN rollout for the state. It’s what Tasmania needs; it’s what it, more than any other state, has always been promised; and most importantly, it’s what long-suffering Tasmanians deserve.